Lithuanian Airlines sale to get green light

The privatization of Lithuanian Airlines looked set to get the green light by Cabinet officials, paving the way for the landmark privatization in 2003.

The Lithuanian Cabinet of Ministers was expected to approve the privatization Dec. 18 in the form of a strategic sale to a medium or large EU carrier that will maintain Lithuanian Airlines' future place in the competitive environment of the European Union's Common Aviation Area.

"The privatization is necessary for Lithuanian Airlines to retain its place in the market post-EU accession," Rimas Butkus of the State Enterprise State Property Fund explained.

"A strategic sale to a medium or large airline will give Lithuanian Airlines the alliance it needs to keep access to new destinations, routes, hubs and landing slots."

Under current EU legislation, existing bilateral arrangements will be phased out and replaced by an open-skies arrangement that would allow easier access to Lithuania by foreign airlines.

Managed by the State Enterprise State Property Fund, the privatization plan on the Cabinet's table would sell Lithuanian Airlines in the form of an open tender.

Potential bidders have already been examined and are thought to include Sweden's SAS and Denmark's Maersk.

LAL is currently 100 percent state-owned. Under the proposed privatization plan, the airline should sell a 34 percent stake to a strategic investor and within two years issue additional stock that will be sold entirely to the investor, increasing the total stake to 66 percent.

Founded in 1991, Lithuanian Airlines runs a fleet of seven aircraft and flies to 13 destinations in 12 countries. Apart from its core passenger business, LAL also carries cargo and mail.

Included in the upcoming sale will be LAL's four subsidiaries: Air Lithuania, which carries out short flights to Northern Europe; Aero-Chef, the catering division; LAL Cargo; and Aviaturas ir Partneriai, a tour operator.

The government is expected to retain a 34 percent stake, with the remaining 66 percent to be sold to the chosen Northern European airline.

Full details of the closure date, the value of the sale and the potential bidders will be known once the privatization has been approved by the Cabinet.